Case Note & Summary
The appeal arose from an order dated 27 September 2022 passed by the City Civil Court at Mumbai dismissing the appellant's Notice of Motion in Suit No. 1644 of 2022. The appellant, Deluxe Caterers Pvt. Ltd., had entered into a Conducting Agreement dated 20 November 2017 with respondent no. 1, M/s. Narayani Associates, to use and occupy suit premises for running its restaurant 'Copper Chimney'. The agreement had a fixed term. Due to the COVID-19 pandemic and government-imposed lockdowns, the appellant invoked the force majeure clause in the agreement, seeking extension of the term by the period of disruption. The trial court dismissed the motion, leading to the appeal. The legal issue was whether the force majeure clause allowed extension of the term. The appellant argued that the clause expressly provided for extension, while respondents contended that the clause only suspended obligations and did not extend the term. The High Court analyzed the force majeure clause and held that it was intended to protect the conductor from loss of term due to events beyond control. The court allowed the appeal, setting aside the trial court order and directing that the term of the agreement be extended by the period of lockdown and restrictions. The court also granted interim protection to the appellant.
Headnote
A) Contract Law - Force Majeure - Extension of Term - Conducting Agreement dated 20 November, 2017 - The issue was whether the term of the agreement stood extended when the appellant invoked the force majeure clause due to the COVID-19 pandemic. The court held that the force majeure clause provided for extension of the term by the period of disruption, and the appellant was entitled to such extension. (Paras 2, 20-30) B) Contract Law - Interpretation of Force Majeure Clause - Specific Performance - The court interpreted the force majeure clause in the agreement and held that it was intended to protect the conductor from loss of term due to events beyond control. The court directed that the term be extended by the period of lockdown and restrictions. (Paras 15-25)
Issue of Consideration
Whether the term of the Conducting Agreement dated 20 November, 2017 would stand extended by virtue of the appellant invoking the force majeure clause.
Final Decision
Appeal allowed. Order dated 27 September 2022 passed by the City Civil Court at Mumbai is set aside. The Notice of Motion No. 2577 of 2022 is allowed in terms that the term of the Conducting Agreement dated 20 November, 2017 shall stand extended by the period of lockdown and restrictions due to COVID-19. Interim relief granted.
Law Points
- Force majeure clause
- extension of term
- COVID-19 pandemic
- contractual interpretation
- specific performance
